US Product Rental and Leasing Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 51,175 product rental and leasing establishments in the US provide the use of commercial and consumer goods in return for lease or rental payments. Establishments may rent or lease nonfinancial intangible assets, including patents and trademarks (but excluding copyrighted works).
Seasonal, Uneven Demand and Cash Flow
Cash flow in the equipment rental/leasing sector is seasonal and driven by the dynamics of downstream industries.
Variability in Residual Value
Firms are exposed to financial risk when the market value of a vehicle or rental good is less than its depreciated value (residual value) when it is sold.
Industry size & Structure
The product rental and leasing services sector is comprised of 51,175 establishments that employ 585,900 workers and generate $210 billion in annual revenue, according to government sources.
- The product rental and leasing services sector represents 1% of the nation's Gross Domestic Product (GDP) and employs 0.4% of the country's workers.
- The sector is concentrated with the 20 largest firms representing 48% of revenue.
- In addition to employer establishments, the product rental and leasing services sector has 83,000 owner-operated establishments with no employees. Subsectors with the highest numbers of nonemployer establishments are commercial and industrial machinery and equipment rental and leasing (42%); automotive equipment rental and leasing (26%); and consumer goods rental (23%). The owners of nonemployer establishments typically perform the work and may outsource support functions like marketing and accounting.
- The product rental and leasing sector has shed about 4,100 establishments annually, which equals about 8.7% of existing establishments. However, the sector has added about 4,300 new establishments annually, which is equivalent to 8.4% of existing establishments. As a result, the sector has an average loss rate of 0.3%.
- The product rental and leasing sector is forecast to grow its employment base by 2.5% overall in 2021-2031, which is much lower than the national average of 5.3% for all jobs, according to the Bureau of Labor Statistics.
Industry Forecast
US Product Rental and Leasing Sector Industry Growth
Recent Developments
Sep 6, 2024 - More Americans Turn to Consumer Product Rental
- Americans are increasingly opting to rent products instead of buying, either to save money, enjoy greater variety, or have more flexible lifestyles, according to The Wall Street Journal. More than 25% of Americans said they rent or lease their clothing, furniture, car, or electronics, according to a recent survey commissioned by Credit Karma. Amid high inflation, some consumers – many of them Gen Zers - find it more economical to rent items rather than buy. A lack of affordability in the home-buying market has contributed to a stronger rent-first mindset among young Americans, some of whom feel homeownership will likely remain out of their reach. Industry observers say renting day-to-day items has gained popularity as more rental companies have entered the market.
- Demand for building design services improved in July over the prior month, but architectural billings remain soft, according to an August report by the American Institute of Architects (AIA). The AIA’s Architecture Billing Index (ABI) rose to 48.2 in July from June’s reading of 46.4. Any reading of 50 or more indicates growth in architectural billings. The score for new project inquiries rose to 52.4 in July compared to 51.6 in June, and the index for the value of new design contracts increased to 46.5 from 45.6. The AIA’s Chief Economist, Kermit Baker said, "Architecture firms continue to face a billings slowdown. However, the emerging prospects of lower interest rates coupled with a modest uptick in project inquiries suggest that some dormant projects may be revived in the coming months.”
- US automotive fleet sales – which includes rental, commercial, and government fleets – decreased by 2.3% in the first eight months of 2024 compared to the same period in 2023, according to marketing and data firm Bobit. Full-year 2023 fleet sales rose 28% over 2022 as fleet operators snapped up vehicles following an uptick in demand and the pandemic-related supply chain snarls that slowed light vehicle deliveries. Industry watchers suggest slower fleet sales growth is a signal the restocking frenzy may have run its course. Rental fleet sales dropped 40.3% in August compared to the same month in 2023, but rental fleet sales remained up 1.3% on an annual year-to-date basis.
- The Equipment Leasing and Finance Association’s (ELFA) Monthly Leasing and Finance Index (MLFI-25) showed new business volume was up 13% to $11.1 billion in July 2024 compared to the same month in 2023. The MLFI-25 reports economic activity from 25 companies that represent a cross-section of the $1 trillion equipment finance sector. July’s business volume increased 11% compared to June’s $10 billion. Year-to-date, business volume was up 5.5%.
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